Summary Annual Report

The Summary Annual Report (SAR) provides a narrative summary of the financial information contained on the Form 5500 and a statement of the right to receive an annual report.

Exemption

If a plan is not required to file a Form 5500 then it is also exempt from the SAR requirement.

In addition, an unfunded welfare plan need not provide SARs. (An unfunded plan is one in which plan benefits are paid as needed directly and exclusively from the general assets of the employer.) Even though large unfunded plans (those with 100 or more covered employee participants) have to file a Form 5500, they are exempt from providing a SAR.

Please note that large insured plans (which also must file a Form 5500), are subject to the SAR requirement.

Content

Information provided in the SAR should be based upon information contained in the most recent filing of the Form 5500.  If a plan is not required to include information on its Form 5500, it does not need to include the information on the SAR.

The categories of information to be included on a SAR are as follows:

Funding and Insurance Information

• If any claims are paid by an insurer, the SAR should state the name of each insurer and the total premiums paid for the year.
• If any claims are self-insured, the SAR should state the type of claims that the plan sponsor will pay.

Basic Financial Information
If any of the plan funds are held in trust or in a separately maintained fund, the SAR should report:

• Value of plan assets at beginning and year-end
• Increase/decrease in plan assets over the year
• Total income, including employer and employee contributions, realized gains/losses, and earning from investments
• Total expenses including benefits paid, administrative expenses and other expenses

Rights to Additional Information
The SAR must contain statements that the individual receiving the SAR has the right to:

• Request a copy of the full annual report (Form 5500) and any items attached to the Form 5500, such as schedules (see “Schedules” in Geek Out! Form 5500).  The SAR must list those attached items
• Request a statement of plan assets and liabilities
• Request a statement of plan income and expenses
• Examine the annual report at, among other places, the main office of the plan

The SAR must also provide information about how to obtain a copy of the SAR form the Department of Labor.

Offer Assistance in a Non-English Language

• This requirement follows that for SPDs (See “Non-English Language” in the SPD Education Presentation)
• The offer must describe the procedure for obtaining assistance and be written in the non-English language
• The offer should be included with the English SAR

Template SAR

A sample SAR is included in the DOL Regulations.

The DOL also provides a SAR Template.

Distribution

A copy of the SAR should be provided to all participants and beneficiaries receiving benefits, who participated in the plan during the plan year.

• Surviving spouses or other beneficiaries of deceased participants receiving benefits from the plan;
• Alternate recipient receiving distributions under a QMCSO; and
• Representatives or guardians of incapacitated individuals in any of the above categories.

Timing

The SAR must be furnished within nine months of the close of the plan year (or the fiscal year for a trust if it files the Form 5500).

If the plan administrator obtains an extension of time to file the Form 5500, the SAR must be furnished within two months after the end of the extension period.

Noncompliance

Penalties

There are no specific penalties for not automatically providing a SAR, beyond the actions that can be taken for violating an ERISA provision.

• Participants and beneficiaries may bring suit to enforce any provision of ERISA, including the distribution of SARs.
• Criminal penalties may be assessed against any individual or company that willfully violates an ERISA disclosure requirement.
  • This penalty can be up to $100,000 and/or imprisonment of up to 10 years.
  • The penalty can be increased up to $500,000 if assessed against a company.
• The Plan Administrator may be liable for a $110 per day, per occurrence penalty if it does not provide a response to a participant or beneficiary who requests a copy of the SAR.